A Beginner’s Guide to Remortgaging

What is remortgaging?

Remortgaging is the process of switching a mortgage to a different lender without moving homes. For many borrowers, it is also the ideal opportunity to review their personal and financial circumstances and to consider whether their current mortgage and lender is the most suitable for them.

What are common reasons to remortgage?

  • Your mortgage deal has already come to an end and you have been placed on your lender’s standard variable rate (SVR)
  • Your existing deal is nearing its end and you will soon be placed on your lender’s SVR
  • Reduce monthly repayments and gain extra flexibility on your mortgage term
  • Borrow more money, possibly for home improvements or to pay off other debts
  • Release equity from your home
  • The value of your home has increased substantially
  • Ensure your mortgage meets your personal and financial needs
  • To change to a different type of mortgage

What if you want to stay with your current lender?

If you wish to stay with the same lender when your current deal comes to an end, you can simply complete a product transfer. This means you will be placed on a new product with your existing lender.

Remortgage jargon

Bank of England Base Rate- A rate of interest that is set by the Bank of England. If the base rate rises and your mortgage has reverted to SVR then your mortgage payments are likely to increase.

Early repayment charges (ERCs)- Fees you may have to pay if you wish to leave your mortgage at a specific time, for example, during the period of the initial deal.

Fixed-rate mortgage- The initial period of the deal which is usually between one and ten years where the mortgage interest rate remains the same. As a result, you can be certain that you will be paying the same amount each month for your mortgage.

Standard Variable Rate (SVR)- A mortgage deal will usually revert to this interest rate when the initial mortgage deal comes to an end. The SVR is decided by the lender and your payments may increase or decrease depending on interest rate movements.

Tie-in period- The period of time that you are tied in to your mortgage deal. If you want to leave your mortgage deal during this time you will usually have to pay early repayment charges.

A mortgage where the interest rate tracks the Bank of England base rate or London Interbank Offered Rate (LIBOR), depending on the lender

Want to discuss your current mortgage? To find out whether remortgaging is right for you and your circumstances, you can speak to our adviser today. We will assist you in reviewing your current mortgage and finding the best deal for you.

Is Your Interest-Only Mortgage Coming to an End?

If you are on an interest-only mortgage that is nearing its end, you may be considering the next step. The good news is, you won’t be alone. Nearly 136,000 interest-only mortgages are due to mature in 2017, with a combined value of almost £16 billion. Fortunately, lenders are innovating their products and making more options available for those with maturing interest-only mortgages.

Making plans
A study of those with interest-only mortgages revealed that some borrowers have no plan in place for how to take care of their mortgage reaching maturity. Borrowing into later life can be a complicated scenario and one that needs careful consideration. As your adviser, we would love to help you plan your next step and look through your options.

To get you started, here are just a few ways that lenders can help those borrowing later in life…

Specialist options
There are many specialist lenders that cater for those that require bespoke borrowing options later in life. Several have been working to innovate their over 55s range of mortgage products. These include residential interest-only mortgages, specifically designed for those aged 55 and over, and other tailored older borrower solutions. Some building societies and smaller lenders want to ensure that age is no longer a problem for those that want to borrow into retirement. One lender recently launched as many as 28 new older borrower products, which includes several interest-only options. Specialist lenders often don’t use computers to decide whether you should have a mortgage, and want to help those that need to consider a more nuanced post-retirement borrowing option.

Later life lending
The percentage of people aged over 66 when their mortgage ends climbed from 22% in 2012 to 39% in 2016, a significant increase in just a few short years. Mainstream lenders are now extending their maximum age limits to follow the trend.

Several high street lenders have recently increased their maximum age to 80 and in some cases 85. In their determination to help older borrowers, some lenders even have no maximum age limit whatsoever. Contact us today to arrange a meeting!

 

Remortgage Market Expected to Continue Growing

According to the Council of Mortgage Lenders, both residential and buy to let remortgaging is expected to continue to grow in the second half of 2017. Low mortgage rates has continued to encourage borrowers to refinance and move away from their lender’s SVR amongst tough competition between lenders.

But despite the continuing strength of the remortgage sector, homeowners are being warned not to be complacent. For those still considering the options and weighing up the benefits, the time to remortgage could be now.

A surprise result at the Bank of England
Nearly three in five people that remortgaged in May said they believed the average mortgage rate would be unlikely to change over the next 12 months. But June’s vote on interest rates from the Bank of England’s Monetary Policy Committee (MPC), kept rates at 0.25% by only five votes to three.

Despite some signs of a possible economic slowdown, three members of the committee voted for an interest rise amidst rising inflation. It has been a full decade since the Bank of England last raised the base rate and this result has ruffled several feathers in the industry.

A warning of complacency amidst low rates
There are currently millions of people sitting on their lender’s Standard Variable Rate (SVR). In fact according to the BSA, 2.5 million mortgage borrowers have never experienced a base rate rise.

Homeowners are therefore currently being urged to be wary of complacency and to take advantage, especially as lenders compete for new customers, helping drive down the cost of mortgages. Data from the Mortgage Brain shows that the cost of a five-year fixed rate loan at 70% LTV is now only 2.04%. This is a full 2% lower than it was at the start of April 2017.

But many experts are saying that after the MPC’s latest vote and due to rising inflation, we are as close to a rise in base rate as we have ever been in recent years.

If your current deal is reaching its end or you would like to find out whether you could be saving money on your mortgage, contact one of our advisers today to arrange a meeting and discuss your options.

Looking Beyond the Claim Stats

The protection market has fought against the myth that policies are simply too unreliable for some time. The market has worked hard to address this, and once again the latest claim stats released by a number of providers show that they are very much on the customer’s side. But are stats alone enough to break through the protection myth barrier?

Public perception
Figures from the Association of British Insurers (ABI) showed that in 2016 insurers paid out 97.3% of claims. But research from a leading provider revealed that over a quarter of consumers (26%) still believed that insurers did not pay out in the event of a claim at all.

Some experts believe it is about more than just prevailing myths and disproportionate media focus. They suggest that one of the big problems with claim statistics is that it is almost impossible to stand out from the crowd. After all, most providers produce claim statistics that are as strong as each other, which some suggest may create a sense of public apathy.

A new era for protection
Looking beyond statistics, insurers are focusing more on the policyholder, with an emphasis on the support and services that they need. Providers are speeding up the claims process, advancing payments to help with funeral costs, and increasing the care and bereavement support through access to third parties and medical professionals.

Added benefits and rewards are moving policies from the bottom of the desk drawer to the forefront of the policyholder’s mind. In a win-win scenario for both client and provider, some providers now deliver incentives for keeping healthy and reducing the risk of suffering an illness.

The difference is that more people are talking about their policies, which could help develop a culture based on customer experience. Meanwhile, providers are continuing to develop their policies and share case studies and real-life scenarios. This, along with the continuing success rate of claims, will help advisers talk to clients about the importance of protection.

If you would like to find out more about your protection options, contact one of our advisers today to arrange a meeting.

Landlords Prepare for September’s Changes

The buy to let sector has seen a number of changes in recent years. This has been a challenge for landlords, lenders and advisers alike during a period of adaptability, flexibility and resilience.

But with the Prudential Regulation Authority’s (PRA) second phase of new underwriting standards for buy to let lending coming into effect on 30th September, there is further in store for the sector. Some lenders are already making announcements regarding their approach to buy to let portfolio lending, which means landlords need to prepare now.

What exactly is changing?
In line with guidance set out by the PRA, from 30th September 2017 landlords who have four or more mortgaged buy to let rental properties will be considered as portfolio landlords by lenders. The PRA expects all firms that conduct lending to portfolio landlords to use a specialist underwriting process that takes into account complex borrowing scenarios.

This will require the entire portfolio to be underwritten when applying for a new buy to let mortgage, even if the other mortgages are with a different lender. Lenders will also be required to use additional affordability tests on portfolio landlords and will require additional documentation to support applications.

How can landlords get ready?
Specialist lenders, already experienced in using a similar underwriting approach, have been clarifying their stance and assessment criteria. Outside of the specialist lending market, the majority of mainstream buy to let lenders have yet to confirm their plans, aside from The Mortgage Works who will continue to support portfolio buy to let lending going forward.

Industry commentators have raised concerns that the upcoming rule changes and a lack of support from larger buy to let lenders, could ultimately reduce the availability of loans to portfolio landlords and increase the price of lending.

There is likely to be more clarifications in the coming weeks leading up to 30th September and many experts are calling for quick clarification where possible. Landlords will need to keep up to date on lender announcements regarding portfolio lending. Depending on your situation, some of these stances may affect your current or future plans.

If you would like to find out more and get up to date on the upcoming PRA changes, contact an adviser to discuss.

Are You Thinking of Improving Your Home?

Home improvements can add substantial value to your home. According to Barclays an average of £14,000 return on investment can be made by building a 30 square metre extension in the UK. If you were to do this in London, this would be a staggering average return investment of £156,000.

So, what can you do to improve your home?

Working on the inside of your home can increase the appeal to potential buyers whilst also making it a better space to live in if you aren’t considering moving. A good place to start may be to upgrade your bathroom or kitchen. It is possible to do this in small steps, for example, you could change the taps, add in a heated towel rail or update the appliances. Buyers are likely to pay more for a property that is complete with a modern kitchen and bathroom, as it saves them the expense and hassle of upgrading the home themselves.

Another way you could improve your home is by creating extra space. This has the potential to increase the value of your home and is a great way to create more room for a growing family without the stress and cost of moving. A great option is to extend out by building a decent sized room that fits the style of the current house. Another option to consider is extending up by converting the loft in to an extra bedroom. You could even update the layout of your home by moving walls, for example, making your kitchen and living area open plan to give the property a modern appeal.

As we all know first impressions are extremely important, so improving the outside of your home could be a major selling point. Research by Barclays shows that a well looked after garden is one of the most desirable outdoor features. Small investments such as decking or outdoor lighting will also increase the appeal of your garden.

If you have a garage and don’t use it to park your car in, you could enhance your home by converting it in to an extra living space. Great options to consider are a games room, a children’s play room, an office or even a gym.

Remember if you are planning a conversion or extension it is important to consult with your home insurer and to explore if you will need to attain planning permission.

I can’t afford to make any home improvements, what are my options?

There may be the option for you to remortgage in order to borrow money for home improvements. You will probably be required to outline why you are applying for the additional funds when applying for a further advance. It is also easy to slowly make small changes at a low cost, such as painting rooms, to considerably increase the value of your home over time.

What can you do now you’ve made your home improvements?

Selling your newly improved home may be an attractive option if the value has increased significantly, allowing you to move to a bigger house or a better area. If you have made major home improvements, it is likely that the value of your home will have increased. This means it is a great time to remortgage to get a better mortgage deal that could reduce your monthly mortgage payments.

 

5 Reasons Single People Need Life Insurance

You are young and healthy
The premium you pay each month for life insurance is highly dependent on your age and your health, the younger and healthier you are the less you will pay. For example, if you were to take out a £400,000 life insurance policy at the age of 30 and have a non-smoker status with no health complications, it could cost as little as £11.24 a month (L&G March 2017). By waiting to take out a policy later in life you run the risk of it being a much greater cost, especially if any health issues arise.

You are living with your partner
If you own or rent a home with your partner you will usually have shared financial responsibility. If one of you were to die, would the other still be able to afford to live in the same place? Most mortgage terms are based on joint affordability when buying a home together, meaning it is unlikely you would be able to meet the payments on your own. Life insurance would ensure you had adequate money to meet your mortgage payments and maybe even help you pay off the mortgage entirely.

You plan to have children in the future
If you have children it is always a good idea to have life insurance to ensure everything is taken care of financially should the worst happen to you. Even if you don’t have children yet but are considering having them in the future, it’s always worth future proofing your life cover when it’s more affordable and less likely to be impacted by age.

You want to help cover the cost of your funeral
Funerals can be extremely expensive, figures from Royal London show that in 2016 the average cost of a funeral was £3675. Most people wouldn’t want to leave their family with the stress of such expense whilst also having to deal with grief. By taking out a life insurance policy your family may receive an advance payment to help cover this cost. For example, many providers such as Royal London have a fast track process. In 2016, 60% of Royal London’s claims were fast-tracked and on average claims were paid out within three days. You may have to take care of family members in the future If you plan on supporting your aging parents or maybe even a disabled sibling in the future, what would happen if you were no longer around to offer this support? By having a life insurance policy arranged you can make sure there is money in place to help support your family as planned.

 

Could you be saving money on your mortgage?

If your mortgage is on a standard variable rate then you may be missing out on an opportunity to save money on your mortgage payments. So why not shop around for your mortgage as you would with your other monthly outgoings, it might even be the biggest saving you make.

Data from Virgin Money has stated that as many as 70% of homeowners could reduce their monthly outgoings by transferring from a standard variable rate product to a fixed rate mortgage*. This is due to the attractive low mortgage rates the market is experiencing currently.

Depending on your needs and mortgage requirements, reviewing your finances and remortgaging could also give you extra flexibility on your mortgage term and how you pay your mortgage. As an intermediary we offer advice on a variety of remortgage options, so you can receive the right product for you in what may seem like a mortgage maze.

So what are the main reasons to consider a remortgage?

  • Reduced monthly repayments
  • Extra flexibility on your mortgage term
  • So you can borrow more money, possibly for home improvements or to pay off other debts
  • Your current deal is about to end
  • The value of your home has increased substantially
  • Ensure your mortgage meets your personal and financial needs

Throughout our lives our circumstances often change which means that the level and type of insurance you need may need to be reviewed. Therefore, whilst considering your mortgage options it is always worth discussing your protection needs to make sure they match your requirements.

Speak to our advisor today to find out more about remortgaging and how we can help you protect your home and lifestyle.

*Based on Virgin Money assumptions as to the new business interest rates available to, and savings achievable by, borrowers remortgaging away from a standard variable rate. This uses stock residential mortgage data from the CACI mortgage market database, 31 January 2017.

What Protection Do First-Time Buyers Need?

When first-time buyers are taking their opening steps into homeownership, protection may not be at the top of their mind. But discussing cover with an adviser is an important step in the mortgage process. This is the ideal time to ensure all possible circumstances are covered, to protect against worst-case scenarios.

Some protection is mandatory for lenders, such as building insurance. Other insurance is common sense, such as including contents insurance as part of your plan. But this is not the same thing as being “essential”. An adviser will look at each person’s circumstances and their budget, then explore any scenarios that would leave them in a financially or emotionally difficult situation. Life insurance can help to pay off the mortgage and protect loved ones from losing their home. But what about all the other bills and goods that a family requires? What about the time the spouse will need to spend with children during a difficult time? This may not be covered by life insurance alone, especially if the remaining spouse is forced to increase their work hours to compensate for the drop in income. Suitable cover A key consideration when an

A key consideration when an adviser reviews your protection needs is ensuring the cover is appropriate for your situation. For instance, it could be argued that for a single adult with property-owning parents and no dependants, life cover may not be the best option. Instead, a menu plan solution including critical illness cover and income protection, is more likely to provide the long term security you would need during the mortgage term. The value of cover has increased, as the likelihood of being unable to work or being diagnosed with a critical illness is higher. A person with a young family to look after will almost certainly need some form of life insurance. Furthermore, it is important to consider family income benefit, which can provide secure and long term payments to the family left behind to cover the mortgage and help with other costs. Some providersalso offer free life cover for the first year you have a new born child, as well as benefits such as counselling services and health and legal advice. If you would like to find out more on

If you would like to find out more on cover for first-time buyers, talk to us today to arrange a meeting with our adviser.

The Real Cost of Critical Illness

We often protect our car, home and pets before ourselves, sometimes assuming that personal protection such as critical illness cover is too expensive to consider. But without protecting yourself would you be able to cover the costs in the event of a critical illness?

A recent report by Macmillan Cancer Support suggests cancer costs an average of £570 a month in increased outgoings and reduced income. £570 is comparable to the average monthly mortgage payment in the UK. Critical illness cover pays out a lump sum to help with these additional costs and loss of income should you be diagnosed with a critical illness included in your cover.

The additional costs can often be associated with things like regular trips to medical appointments or in some cases having to pay for additional childcare. As a result of cancer 30% of people experience also a loss of income, with those affected losing an average of £860 per month, whilst 33% of individuals either have to stop working permanently or temporarily.

Living with an illness is stressful enough for you and your family, but worrying about the implications of not having financial cover does not bear thinking about. Having suitable protection to give peace of mind and security for you and your family in the face of a critical illness has never been more important.

Are you worried about your financial position should the worst happen? Speak to one of our advisers today to see how they can help protect you.